Videogames' complex nature makes them perhaps the worst possible medium for crowdfunding - and consumers seem to be catching on

You know what everyone forgets about the story of the boy who cried wolf? In the end, there actually was a wolf - a ravenous, man-eating wolf. It's as much a parable about the dangers of ignoring credible threats just because the present situation is rosy, as it is about the social ills of sending bored teenage boys up lonely hillsides in the era before they could stream high-definition porn over LTE.

That springs to mind because looking at the latest data on videogame crowdfunding from ICO Partners this week, it's pretty clear that the wolf has actually made an appearance. For the third half-year running, Kickstarter revenues for videogames failed to top $10 million. 2017 thus far is a little up on the dismal 2016 figures, but the figures are a long way off the heyday of videogame activity on Kickstarter; less than half the revenue of 2015, and far from the $28 million peak reached in the first half of 2013. The graph is uneven, but the overall trend is one of decline.

The wolf, in this instance, is consumer confidence in crowdfunding - and by god, were there plenty of boys up on hillsides shouting about that a few years ago. As developers big and small flocked to crowdfunding platforms in the early 2010s, lots of notes of concern were sounded. Many of the projects being funded were clearly over-ambitious; even some developers with great track records were pulling in cash for projects that looked disconcertingly open-ended, while some games were being funded despite the teams behind them showing little evidence of being able to execute on their plans. Yet at that point, the crowdfunding market just kept growing and growing; no matter how much hand-wringing there was about the likelihood of failed projects, the money and the hopeful wannabe fundees kept coming.

"You reach a point where, burned by a couple of failed projects and still waiting to see if many of the others will deliver, there's a serious case of Kickstarter fatigue that hits you"

To be perfectly clear - a large number of those projects were successful (albeit not necessarily timely), delivering games to their backers and, in many cases, doing so to significant acclaim. Crowdfunding has proven itself as a useful and worthwhile tool in the past five years; in the right hands, with the right people behind it, it's a funding avenue that can help to revive overlooked genres and IPs, or unleash creatives who have been trapped in stifling studio environments for too long.

The problem is, as plenty of people tried to point out, that you don't remember the times you paid for a game on Kickstarter (and that's really how most consumers view the service - as a glorified preorder system) and actually got it. You remember the times you got nothing. You remember the game you got excited about and ordered a premium reward tier for, and it never materialised. You remember the developer who evaporated when the funding cash ran out, or the rewards that were never produced, or the game that ended up being half-finished and lacking everything originally promised.

Eventually, rather than being annoyed at an individual developer, consumers who had experienced this kind of problem began to be suspicious of the whole notion of crowdfunding. After all, the horizons for videogames are incredibly long anyway; you back a project on Kickstarter and maybe get a copy of it two or three years later. It's hard to maintain excitement over that kind of timespan, and you reach a point where, burned by a couple of failed projects and still waiting to see if many of the others will deliver, there's a serious case of Kickstarter fatigue that hits you.

"It's about the capacity of perfectly well-intentioned people to deliver on their promises, and hence about the fundamental suitability of a project to crowdfunding"

The low figures on Kickstarter for videogames over the past 18 months are a testament to that fatigue setting in across a wide swathe of consumers - and it's really not clear whether the numbers will ever rebound again, as they did in 2015 following a previous slump in 2014. The thing is, this malaise is very specifically about videogames; it's not shared in other categories, and ICO Partners points out that arguably videogames' closest "relative" on the platform, board games, are enjoying extraordinary growth. Back in H1 2012, when videogames were already rolling in around $17 million, board games managed just $6 million. Solid growth since then has seen the sector reach an extraordinary $70 million in the first half of this year - far more than videogames on Kickstarter have ever earned in a semester.

So what makes board games so much better and more reliable as crowdfunding projects than videogames? It's not that there are naturally fewer chancers and hucksters pushing dodgy board game projects than dodgy videogame projects; in fact, this isn't really about the chancers and hucksters, thankfully tiny in number, at all. Rather it's about the capacity of perfectly well-intentioned people to deliver on their promises, and hence about the fundamental suitability of a project to crowdfunding.

We talk a lot about how the proliferation of free game engines and other technology has democratised game development, and that's true - the ability to create and distribute a game has never been more open and freely available to all. This pales, however, in comparison to the democratisation that has happened in the realm of physical product. An end-to-end process which once required a huge company and major financing has been stripped down into a set of services accessible by anyone with a laptop. Platforms like Taobao have made mass-manufacture available to all; distribution systems opened up by Amazon and others allow inventory, warehousing, stock management and distribution to customers to be completely, painlessly outsourced. There are still pitfalls, but the process of getting something physical like a board game into the hands of consumers is essentially a solved problem, a set of steps anyone can follow.

Compare this with videogames; sure, engines solve a lot of issues, and distribution is by-and-large a solved problem, but everything in between remains incredibly complex, difficult and involved. That's just in the nature of the medium; even a simple videogame requires creative input (in the form of art, music, animation, scripts, voice acting, design, code etc.) in a volume that's orders of magnitude greater than even a very complex board game. This is not a measurement of quality, merely of reality; constructing a game takes more people, more coordination and a more diverse set of creative talents, all of which have to be managed and overseen by a skilled project leader.

"The fact that consumers have come around to this way of thinking - just as the wolf-criers anticipated they would - is a nail in the coffin of small projects and newcomers on Kickstarter"

It may not be a popular view, but I'd argue that this makes videogames into absolutely the least suited creative medium for crowdfunding - and I think Kickstarter's figures show that consumers are coming around to that view as well. The problem, at its heart, is that consumers are good at assessing the "easy" bits of games - they can look at concept art or design ideas or an elevator pitch and say, yeah, I'd like to play that - but have absolutely no insight or ability to assess the hard parts.

They don't know if your programmers know their way around the network code or if your artists have the slightest notion how to keep their polygon counts down or if your designer has specced out a game system that's ill-advised and will lead the game down a blind alley for six months. They don't know, and have no need or desire to know, how to evaluate your team's coordination and project management, or how to assess the financial structure and contracts you've got in place. These are the things that sink game projects; not concept art or broad ideas or elevator pitches. Professional publisher staff have spent their working careers learning how to assess these aspects of a studio and a game pitch, and they still screw it up on a regular basis; the idea that this assessment was going to emerge from the moronic "wisdom" of the crowd was pie in the sky from day one.

Unfortunately, the fact that consumers have come around to this way of thinking - just as the wolf-criers anticipated they would - is a nail in the coffin of small projects and newcomers on Kickstarter. Lacking the ability to figure out how likely a game is to actually be built in any other way, consumers will naturally turn to looking solely at the developers' track record (even though that's also no guarantee, as several high profile failures have shown). Famous names with big games on their CVs will get funded; newcomers, no matter how solid their plan and superb their design may be, are going to face a hell of a lot of scepticism from an audience that's been bitten too many times in the past. Those who got in on the ground floor and have already completed and shipped successful Kickstarter games are probably in the clear; those hoping to tap crowdfunding to launch a career will need to look elsewhere. The wolf was on the hillside all along, you see; it just took five years before he really sank his teeth into this once-promising funding model.

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Without having the data in front of me, I'd suggest that maybe developers are also losing confidence in kickstarter (and/or their own ability to market and promote a kickstarter campaign).

Anecdotally, from speaking to other indies, after you've been through the bruising experience once, it's often not something you want to repeat in a hurry. Equally, lots of devs seem to be setting smaller and smaller targets because they are thinking "better to go for a low target and go voer it, than a high one and just miss out."

A lot of these teams simply have unrealistic financial expectations. Achieving that low target to get a small amount of funding can give them a quick boost but if they can't seek proper financing elsewhere to complete the project, everyone loses.

I'm thinking of one project that asked in the vicinity of 30K for a fully animated game with professional voice overs and all, that resulted as expected in a crude and incomplete demo as final product.

Another one in the more reasonable 500K+ range from veteran devs. It is now over 4 years past its expected release date and not looking particularly good for a quality release any time soon.

When you compare that with paying $10-25 for very decent, complete games that you can play immediately, there's very little reason to consider KickStarter from a customer's point of view (unless you really like those cheap t-shirts and extra goodies).

I did the research and shared those numbers - I don't see how you can draw this kind of conclusion when looking at them.

The total amount of money is somewhat down, the number of funded projects is not. The tiered numbers show they are fewer big projects, this highlights the fact that past year larger numbers were driven by "hit" campaigns. The normal, more common campaigns, numbers are very stable.

I feel like this editorial, like James' initial reporting of the research, is projecting a lot.

I will take the highlighted quote:
"The fact that consumers have come around to this way of thinking - just as the wolf-criers anticipated they would - is a nail in the coffin of small projects and newcomers on Kickstarter"
I think you only read James' article and not the source. There are very steady number of projects funded every year, and that stable. If anything, smaller projects are not finding less funding. The number of projects raising between $100,000 to $500,000 is quite steady, or even growing.
I don't understand the quote mentioned in that context.

For the people who get funded for by Kickstarter, it is the most important thing in the world. But any major publisher could fund an entire year worth of video gaming Kickstarters, file it in the quarterly report under expenses-other and call it Tuesday.

The biggest problem I've seen is that creative people think they can manage the business side, and except in rare cases they can't, and they run out of money, or it takes way longer than they thought. Everyone who's asked me about this I've told to run the numbers and double it.